Earlier this week, we talked about the perks of paying with a credit card to get those airline points or cashback. Credit cards, after all, are a nice tool to build credit as long as you can pay them off. Here are four tips for paying down credits cards in 2020.
These tips come to us from Bank of America. First, target one debt at a time. If you carry a balance on more than one card, make sure you always pay at least the minimum on each. But focus on paying down the total balance one card at a time. Either tackle the card with the highest interest rate or pay off the card with the smallest balance.
Next, pay more than the minimum. You’ll pay less interest overall. Every dollar over the minimum payment goes toward your balance.
Also, consolidate your debt. Combining higher-interest balances into a lower rate will save you money in the long run.
If you have equity in your home, you may be able to use it. A home equity line of credit may offer a lower rate than what your cards charge. Closing costs usually apply, but an extra benefit is that home equity interests are often tax-deductible.
Lastly, reprioritize your budget. Categorize your monthly spending, like groceries, transportation, housing and entertainment. Look where you can cut back and use that cash to pay down debt.